Drowning in Debt While Raising Kids? Here Are the Options You Might Not Know About

Photo by Towfiqu barbhuiya on Unsplash

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Debt isn’t something anyone should face, but it’s more common for many to find themselves in debt at some point in their lifetime.

Whether it’s being in debt due to a mortgage or financing a car that you’re actively trying to pay off. There is a lot of ‘debt’ where money is owed, but you’re paying it back effectively over time.

Debt can become more dangerous when you’re spending haphazardly, beyond your means, or struggling to keep up with the general costs of day-to-day living. This can result in a reliance on credit cards and loans, all of which add to your overall debt further and can lead to a lot of sleepless nights and headaches.

In this guide, we’ll look at how you can help keep your head above water when you feel like you’re drowning in debt while raising kids. There are several options that you may not know about and can therefore pass that knowledge down to your own kids to ensure they’ve got plenty of financial literacy and knowledge for when they start earning money.

Immediate actions to stop the bleeding of money

To help tackle the overwhelming situation of being in debt, you want to take some immediate actions that can help you stop bleeding money left, right, and center. Let’s take a look at some of the helpful tips that will hopefully slow down spending and help you catch up.

Track everything

It’s imperative that you’re tracking every last dollar and seeing exactly where your money goes. You could create a simple spreadsheet or use budgeting apps that identify what you’re spending your money on and, especially, subscriptions that you may have forgotten about paying for.

Tracking everything will give you insight into what you could potentially cut out for the time being while you catch up with the debt you’ve accrued. 

Cut out non-essentials

Take a good look at all your expenditures and think about them carefully. Which ones could you realistically cut out right now? Perhaps it’s savings you put into your own pot or your child’s savings every week or month? Could it be a subscription to a gym or perhaps a coffee subscription?

There are going to be some vital expenses that you can’t go without paying, such as bills and taxes. However, there will be expenses that could be considered as luxuries and therefore removed for a period of time while you try to find ways of paying back your debt. Consolidating all of your non-essentials and canceling them is a great step in the right direction. 

Tackle the high-interest debt first

When it comes to tackling your debt, you should be maximizing strategies like the debt snowball or avalanche, which help you eliminate credit card debt quickly.

The debt that comes with the highest interest should go first, even if that’s not a great deal of debt owed. It’s better to clear the higher interest debt first, or if you can, consolidate all of your debt into one place.

Photo by Towfiqu barbhuiya on Unsplash

Consolidating all your debt is a helpful way of having it all in one place. That way, you don’t need to panic or worry about missing multiple payments.

A small emergency fund is helpful to have once you’ve got close to paying off all your debts. It’s a good way of making sure that you’re not slipping into debt in the future. 

Debt relief and management of debt

When it comes to dealing with debt beyond stopping the bleeding, there are a lot of debt relief and management options to help you break the cycle and get professional help.

Whether that looks like bankruptcy services to clear overwhelming amounts of debt or debt consolidation. Here are a few ways in which you can provide some relief and better management for any amount of debt that might have accrued over time.

Credit counseling

A lot of non-profits are able to offer free or low-cost advice, as well as debt management plans. When you think about it, not everyone is taught good financial management or how to deal with money in general from a young age.

It’s therefore important to understand how to budget, how to navigate spending in line with your lifestyle, and how to tackle debt if you ever get yourself into it.

Debt consolidation

One of the best things you can do when it comes to your debt is to have it all in one place. When you have debt in multiple places, it can be hard to keep track of where it all is and what you owe, and that can lead to missed payments and late fees as a result.

Therefore, it’s important to think about consolidating your debt so you’ve got lower rates and you can manage it with a bit more ease. From personal loans to a balance transfer card, these are all helpful for the consolidation of debt.

Bankruptcy

There will be times when paying off debt seems impossible, and there might actually be too much debt to cope with. As a last resort, declaring bankruptcy can be a great way of starting from zero by clearing all of that overwhelming debt.

Child-specific and family options for debt management

There are some services available that are helpful for those who are tackling debt with children and need some options to help make living more affordable.

Childcare subsidies

Research state-run programs like CCDF or Head Start for affordable care opportunities.

Tax credits

Claiming the Child Tax Credit and Child and Dependent Care Credit is helpful for boosting your income.

529 plans

Saving for your child’s education is important, and with tax-free growth using a 529 plan, it’s beneficial to start as early as possible.

Generational wealth

Teaching kids about saving and investing habits helps them mitigate the risk of spending haphazardly and spiraling into financial trouble.

What government and community support is available?

There’s a fair bit of government and community support available when it comes to help with debt, and that’s worth knowing about. These include:

• SNAP (Food stamps)
• TANF (Temporary Assistance for Needy Families)
• WIC (Women, Infants, Children)
• Food banks, utility assistance (LIHEAP), and community health clinics. 

The long-term strategies of debt management are what can help you tackle debt effectively, wipe the slate clean, and make good money habits so that you don’t fall into debt again.

*This article is based on personal suggestions and/or experiences and is for informational purposes only. This should not be used as professional advice. Please consult a professional where applicable.